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Telecom Letter Decision
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Ottawa, 14 February 1989
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Telecom Letter Decision CRTC 1989-5
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TO: - Consumers' Association of Canada
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- British Columbia Telephone Company
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RE: Appeal by the Consumers' Association of Canada of Taxation Order 1988-5
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On 7 October 1988, the Consumers' Association of Canada (CAC) appealed Taxation Order 1988-5 pursuant to section 44(10) of the CRTC Telecommunications Rules of Procedure (the Rules). Pursuant to Telecom Costs Order CRTC 1988-2, CAC claimed $250 per day for time spent travelling to and from Vancouver to participate in the British Columbia Telephone Company (B.C. Tel) Construction Program Review (CPR) hearing. The taxing officer asked CAC to specify the number of hours actually spent on preparation during this travel time and taxed those hours at the higher rate allowed for preparation outside of travel time. No costs were taxed for travel time during which there was no preparation.
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In its application, CAC requested that the Commission reconsider the decision of the taxing officer not to allow CAC to recover costs in respect of travel time not spent preparing for the proceeding.
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CAC noted that costs are taxed in accordance with section 44(6) of the Rules, which provides that:
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44(6) Costs awarded under this section
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(b) ...shall not exceed those necessarily and reasonably incurred by the intervener in connection
with its intervention...
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CAC submitted that the time spent travelling to and from Vancouver to participate in the CPR clearly constituted an expense "necessarily and reasonably incurred" by CAC in connection with its intervention. CAC noted that it was obviously necessary for them to fly to and from Vancouver to attend the hearing, and that CAC is allowed to recover the costs of the airplane tickets.
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In addition, CAC's counsel and financial analyst were not available to do other work for CAC while they were in transit, yet CAC pays their salaries during this period.
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CAC argued that they have an entitlement to these costs for travel time by virtue of section 44(6)(b) of the Rules. With respect to the precise amount of costs that should be taxed, CAC noted that it has always claimed less than the normal preparation rate for travel time in recognition of the fact that time spent travelling may be spent preparing or may be spent on other activities not related to the hearing.
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B.C. Tel filed its answer on 3 November 1988. B.C. Tel submitted that, unlike travel expenses, travel time does not involve any out-of-pocket expenses and may not involve any lost opportunity. Furthermore, the company noted that section 44(6)(b) of the Rules simply places an upper limit on costs, and that the Taxing Officer has the discretion to award reduced costs or no costs at all where the circumstances warrant.
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In response to the particular points raised by CAC, the company argued that, to the extent that CAC is unable or unwilling to use the time during its flight to prepare for the hearing, the company's subscribers should not have to pay for that time. B.C. Tel noted that CAC representatives should be able to arrange their workload so as to spend a good portion of their travel time either preparing for the hearing or working on other files. The company also noted that the travel may also fall outside of normal business hours, and will therefore not be compensated for by CAC. The company also noted that the approach taken in Taxation Order 1988-5 is consistent with previous Taxation Orders and with the practice in courts.
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CAC submitted its reply on 14 November 1988. In its reply, CAC pointed out that the recovery of costs by interveners is not limited to out-of-pocket expenses. It also pointed out that the CAC does compensate its employees for time spent on CAC business outside of normal business hours. In addition, CAC expressed the view that, if the disbursement for a particular flight is allowed, it follows that there should be recognition in the cost award of travel time in respect of that flight. Finally, CAC submitted that court practice is not binding on the Commission.
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In Telecom Decision CRTC 79-18, the Commission prescribed that the basic test to be applied by the Commission in ascertaining whether the appeal of a decision of a taxing officer should be allowed, is whether the principles enunciated by a taxing officer are appropriate for hearings before the Commission. In Taxation Order 1988-5, the principle enunciated by the taxing officer was that travel time not spent preparing should not be allowed. This principle was based on the taxing officer's view that subscribers should not be required to subsidize activities that are not devoted exclusively to their interests.
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The Commission is of the view that this finding by the taxing officer is entirely appropriate in the context of a hearing before the Commission. In such hearings, the awarding of costs does not represent a finding that the party awarded costs has been victorious and is entitled to be reimbursed for the costs required to defend itself in an unsuccessful action. Instead, the awarding of costs is a means of facilitating the participation of interveners in representing a group or class of subscribers. In these circumstances, a relevant consideration is the appropriateness of having the subscribers bear the costs.
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In this case, the Commission does not consider it reasonable for telephone subscribers to be called upon to cover the costs of CAC employees when those employees are not actively engaged in preparation for the hearing. In the Commission's view, CAC's practice of paying their employees for each and every hour spent on CAC business should not be the determining factor.
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At the same time, the Commission considers that there are various means by which a taxing officer can address the reasonableness of costs for travel time, in light of the principle enunciated in Taxation Order 1988-5. Specifically, a taxing officer may ask the intervener to identify the number of travel hours actually spent on preparation and tax these at the rate used for other preparation time, as was done in Taxation Order 1988-5. Alternatively, a taxing officer may adopt the approach followed in Taxation Orders 1984-2, 1986-2, 1987-2 and 1987-4, in which a lower rate was applied to the travel time, as long as there is evidence that a reasonable portion of the entire travel time was indeed allocated to preparation for the proceeding for which the costs are being taxed. Both methods are designed to avoid having subscribers pay for time not used in preparing the intervener's case
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In light of the above, the Commission has concluded that the taxation officer did not enunciate an inappropriate principle in Taxation Order 1988-5. Accordingly, the appeal by CAC is denied.
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Fernand Bélisle
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